The company clarifies that there was no increase in the absolute amount of working capital limits even after SBLC invocations and there was only an intra facility exposure mismatch.
PC Jeweller share price touched its 52-week low of Rs 23.80, falling nearly 4 percent intraday on December 10 after global analytical company CRISIL downgraded the ratings on the stock.
CRISIL has downgraded its long-term and short-term ratings to the bank loan facilities of the company to CRISIL D.
The downgrade in the rating factors in the instances of devolvement of Letter of Credits (LC) and overutilisation in working capital limits for more than 30 days, as per the rating rationale provided by CRISIL.
The same is reflective from the fact that the liquidity profile of the group has deteriorated in the past few months on account of cash flow mismatches. The ratings reflect instances of LC devolvement and overutilisation in working capital limits, large working capital requirement and the risk of unfavourable regulatory changes.
These weaknesses are partially offset by PCJ group's strong market position in manufacturing and retailing Gold and diamond jewellery and the above-average capital structure, it added.
However, the company clarified that Indian jewellery demand during Q2 at 101.6 tones was almost a third lower Y-O-Y due to weaker consumer sentiments and there was a decline of nearly 51 percent in Indian bullion imports on Q-o-Q basis.
The company also clarified that there was no increase in the absolute amount of working capital limits even after SBLC invocations and there was only an intra facility exposure mismatch.At 0936 hrs, PC Jeweller was quoting at Rs 24.05, down Rs 0.70, or 2.83 percent on the BSE.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.